Sebelius Secretly Exempts Obamacare From Federal Anti-Kickback Law

HHS Secretary Kathleen Sebelius will testify in Congress tomorrow on the status of Obamacare. If any Republican has a spine, or any Democrat has any sense of ethics at all, she will be asked about this.

The Affordable Care Act is the biggest new health care program in decades, but the Obama administration has ruled that neither the federal insurance exchange nor the federal subsidies paid to insurance companies on behalf of low-income people are “federal health care programs.”

The surprise decision, disclosed last week, exempts subsidized health insurance from a law that bans rebates, kickbacks, bribes and certain other financial arrangements in federal health programs, stripping law enforcement of a powerful tool used to fight fraud in other health care programs, like Medicare.

Sebelius disclosed that in a letter to a Democrat congressman without explaining the rationale behind it at all.

Lawyers and law enforcement officials said Ms. Sebelius’s decision was unexpected because the insurance exchanges and subsidy payments appeared to fit the definition of federal health care programs in the anti-kickback statute.

Generally, the law makes it a crime to pay or receive anything of value in return for the referral of patients or as an inducement for people to buy goods and services reimbursed by federal health care programs. Such programs are defined broadly as “any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States government.”

“The secretary’s decision will have some very significant consequences,” said D. McCarty Thornton, former chief counsel to the inspector general at the Health and Human Services Department. “The federal anti-kickback statute will, in most cases, not apply to subsidized health plans or the items and services furnished by those plans.”

The New York Times puts the most innocent spin possible on Sebelius' decision, opining that it will allow coupons to be used to pay for or reduce the cost of services. The Times is the same paper that took 20 Obama "If you like your healthcare" quotes and turned them into "he misspoke." So that paper isn't exactly gunning to show up on Obama's enemies list. Breaking Obamacare free of the anti-kickback law has the obvious potential to open up massive corruption. The fact that Sebelius did not disclose the decision, apparently for years after it was made, suggests that the administration not only understands that, but knows that it will be used in ways that end up enriching the administration's allies.